TAPA & BSI SURVEY


Do you or your logistics providers have standards in place to vet and audit sub- contracted delivery services and drivers?


13


NO 39%


YES 61%


Ostensibly, some companies, if receiving numerous complaints of lost packages from the same IP address or customer, have a fraud algorithm in place that will trigger the involvement of loss prevention personnel and stop more products from being sent to the same customer. Because of this phenomenon, it is likely that companies will not appreciate the amount and scope of losses in this final portion of the “last mile” supply chain at the doorstep of the consumer.


Taking meaningful steps to mitigate such losses is clearly important as a multitude of companies are reconfiguring their business models and how warehouses function in order to meet the demands of eCommerce customers.


Typically, in a warehouse, cargo arrives in pallets and is broken down into boxes and shipped to individual stores. However, in the modern logistics era, cargo arrives in pallets and is broken down in boxes, but then those boxes are kept at lower levels of the warehouse and sometimes in specific areas of the warehouse to allow employees to configure individual orders for individual customers from the warehouse inventory. The order is then no longer shipped in bulk but as an individual order to an individual customer straight from the warehouse.


This reconfiguration is happening for individual companies as well as third party logistics providers (3PLs). Although not the product owner, 3PLs are acting on behalf of the product owner and have thus reconfigured their operations to provide that value-add and order fulfilment to the product owner, enabling the latter to focus on driving new orders.


In the traditional logistics model, if a load of a particular product is stolen somewhere within the supply chain, even during that “last mile” of travel from the final logistics hub or warehouse to a bricks and mortar storefront, that theft and loss is cataloged by loss prevention personnel and adjustments may be made to mitigate threats along that particular route or to those particular shipments. With the new eCommerce model, typically the delivery driver often leaves the package either on a doorstep or in a mailbox and there is no accounting for whether or not the intended recipient actually takes possession of the product. The only way that the company or delivery service knows of a loss is if a customer complains.


Not only that, but delivery services are frequently subcontractors, and possibly three or four links down a chain of subcontractors. It is not uncommon for a delivery driver to


‘Some companies, if receiving numerous complaints of lost packages from the same IP address or customer, have a fraud algorithm in place that will trigger the involvement of loss prevention personnel and stop more products from being sent to the same customer.’


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The following are a list of standards that our respondents’ logistic providers have in place to vet and audit subcontracted delivery services and drivers:


• Contractual requirements • SLAs, SOPs, and periodical audits


• Full pre-employment checks and vetting


• Approval requests from LSPs prior to subcontracting regular routes to external certified or audited subcontractors


• Annex 4 document with security rules


• Logistics security requirements embedded in the contractual clauses which are audited mainly in severe/ high risk countries


• Notification and vetting confirmation when using subcontractors


• RFP and contract requirements stipulate security standards; pre- assessments conducted on all new business partners


• Supplier management tools and audit guidelines


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